tag:blogger.com,1999:blog-34323687.post6740181871044092741..comments2024-03-28T00:23:22.838+00:00Comments on Macro Man: Central Bank Hoedown, Part IIMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-34323687.post-71716131125043126892007-03-08T16:58:00.000+00:002007-03-08T16:58:00.000+00:00My thought is that your “Central Bank Hoedown” pos...My thought is that your “Central Bank Hoedown” posts themselves contain the answer to the questions why did the USDJPY and the Nikkei rise last night. I think their rise is a reflection of the bets placed on Trichet’s comments, namely his specific comment on whether or not he would still call ECB policy “accommodative”. That he did call policy accommodative, signaling the probability of further ECB tightening, removes a perceived threat to a low JPY and related carries. It is the EURJPY that is a primary driver here. As we got closer to the ECB announcement, bets firmed that an end to ECB tightening would not be announced. This produced the EURJPY bounce, and removed the major, immediate-term threat to the low JPY, allowing it to fall and the Nikkei to bounce vigorously.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-65787175343562962062007-03-08T15:45:00.000+00:002007-03-08T15:45:00.000+00:00Because it was based on a view about European, rat...Because it was based on a view about European, rather than US, interest rates!Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-35138862577339792402007-03-08T15:31:00.000+00:002007-03-08T15:31:00.000+00:00A stupid follow-on question: why did you choose th...A stupid follow-on question: why did you choose that instrument? In other words, why not just use the Eurodollar contract?Damianhttps://www.blogger.com/profile/16016686632386396090noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-37679692997739367672007-03-08T15:18:00.000+00:002007-03-08T15:18:00.000+00:00Good sell-side coverage can be a very valuable res...Good sell-side coverage can be a very valuable resource. The only problem is that good sell-side coverage often turns into a good buy-side or prop competitor/colleague!<BR/><BR/>There was an extremely droll website making the rounds last year which featured a talking chimp in various guises (all including sunglasses, if I recall correctly) providing various flavours of sellside patter. Very amusing, and if anyone knows the website and what the link is, by all means post it here.<BR/><BR/>Damian, ERU7 is the September Euribor contract (the European equivalent to the US eurodolalr contract) on 3 month interest rates.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-49415710715516956872007-03-08T15:07:00.000+00:002007-03-08T15:07:00.000+00:00A stupid question - what is the ERU7?A stupid question - what is the ERU7?Damianhttps://www.blogger.com/profile/16016686632386396090noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-11756722882900322102007-03-08T15:05:00.000+00:002007-03-08T15:05:00.000+00:00love your comments referencing brokerage sales .....love your comments referencing brokerage sales ..... in my opinion , talking to sell-side coverage is like giving a machine gun to a monkeyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-61437922700986776282007-03-08T14:55:00.000+00:002007-03-08T14:55:00.000+00:00The guy who issued the Glacier Bonds got a commiss...The guy who issued the Glacier Bonds got a commission? :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-8066464980843944022007-03-08T14:08:00.000+00:002007-03-08T14:08:00.000+00:00What is the world coming to when people issue debt...What is the world coming to when people issue debt in a very high yielding, very illiquid currency like the ISK? I would love to emet the guy that decided to issue just to ask him what he was thinking. Macro Man is no financial Calvinist, despising carry for carry's sake, but he (hopes he) is no fool, either....Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-1214960850392504322007-03-08T14:02:00.000+00:002007-03-08T14:02:00.000+00:00Just a day before yesterday Austria issued few yar...Just a day before yesterday Austria issued few yards of Glacier ISK bonds. <BR/>It is beyond logic, I agree.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-42116552641125463282007-03-08T13:36:00.000+00:002007-03-08T13:36:00.000+00:00What I cannot understand is who/what/where keeps b...What I cannot understand is who/what/where keeps buying ISK. I understand the attraction- the highest rates this side of Istanbul- but the abject failure of the market to liquidity-adjust its ISK views astounds me.<BR/><BR/>Broadly speaking, the ISK has been relatively immune to the slings and arrows of outrageous fortune, and I cannot figure out why.<BR/><BR/>But I cannot help but think that it will end in tears at some point-probably when 'external imbalances' becomes a driving theme of currency markets, whenever that may be.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-17759596016812657892007-03-08T13:22:00.000+00:002007-03-08T13:22:00.000+00:00Regarding EURISK.ISK weakend for 4 minutes and rev...Regarding EURISK.<BR/>ISK weakend for 4 minutes and reversed and got stronger from 89.5 to 88.20, and today even 87.60<BR/>The reason, apparently, interest rate differential is too tempting for some. <BR/>Now let see if it will last for a month more or until rates go down.... <BR/>As per Moody's, even locals were surprised and started selling bank shares :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-69707021913001866082007-03-08T12:03:00.000+00:002007-03-08T12:03:00.000+00:00Damn, you figured out my plot to artificially infl...Damn, you figured out my plot to artificially inflate my P/L! ;) Thanks for the catch...but this seems like such an obvious trade that it almost beggars belief.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-9146341806050939202007-03-08T11:00:00.000+00:002007-03-08T11:00:00.000+00:00exactly, the whole euro rate curve is too low, its...exactly, the whole euro rate curve is too low, its doing exactly as the dollar curve did during 2004-2006 and not pricing in a long enough or high enough cycle. massive opportunity right now.<BR/><BR/>fyi you have a typo, should be 95.955 not 96.955.Anonymousnoreply@blogger.com